USPTO proposes significant changes affecting patent owners’ rights

On May 10, 2024, the U.S. Patent and Trademark Office (USPTO) proposed changes to the rules governing terminal disclaimers to overcome nonstatutory double patenting concerns. As most Canadian patent owners have U.S. patents and patent applications in their portfolio, this proposed change may affect many patent owners looking to enforce their rights to protect their innovations.

In its Notice of Proposed Rulemaking, the USPTO proposed amending the rules of practice to add a new enforceability requirement for terminal disclaimers. Under the proposed rule, a terminal disclaimer must include an additional agreement that a patent will be unenforceable ‎if it is tied directly or indirectly to another patent that has any one of its claims invalidated or canceled ‎based on prior art.

The requirement to add this condition in terminal disclaimers has been proposed to promote innovation and competition by preventing the enforcement of multiple patents directed to obvious variants of an invention, where one of those patents has a claim that is ultimately held unpatentable or invalid over prior art. Such changes are also aimed at reducing the cost of separately challenging each patent in a ‎group of patents directed to indistinct variations of a ‎single invention. As such, the proposed rule is expected to ‎streamline patent ‎disputes and provide greater certainty to competitors and the public.

Current practice

Under the current regime, a terminal disclaimer being filed to overcome a nonstatutory double patenting election/restriction requirement must state that the term of the issued patent will not extend beyond the term of the conflicting patent.

Where multiple patents in a patent family are tied by terminal disclaimers, each patent is viewed separately during enforcement and requires an alleged infringer to separately and successfully challenge each patent asserted by the patent owner in litigation or administrative proceedings to render them invalid. As such, even with the double patenting protections provided by a terminal disclaimer, multiple patents tied by terminal disclaimers that are directed to variants can create a significant barrier to entry for the patent owner.

Proposed rule

Under the proposed rule, the enforceability of a patent with a terminal disclaimer being filed will be impacted by invalidity findings of another patent. The new proposed agreement required in a termination disclaimer provides that a patent will not be issued unless the patentee or patent applicant agrees the patent will not be enforceable if any claim of the other patent is invalidated by prior art.

Specifically, disclaimants would be required to agree not to enforce a patent that is tied directly or indirectly to another patent by one or more terminal disclaimers filed to obviate nonstatutory double patenting in which: 

• any claim has been held unpatentable or invalid as anticipated or obvious by a ‎Federal court in a civil action or by the USPTO, and all appeal rights have been exhausted; or
• a statutory disclaimer of a claim that is filed after any ‎challenge based on anticipation or obviousness to that claim has been made.‎

This enforceability requirement will be in ‎addition to the existing terminal disclaimer rules. Namely, a terminal disclaimer will still ‎require an agreement that the term of the disclaimed patent will match the expiry of the term of the conflicting ‎patent to ensure enforcement only during the period of common ownership.‎ Further, as is the case under current practice, a terminal disclaimer under the proposed rule would be unidirectional, encumbering only the patent ‎with the terminal disclaimer and not the ‎conflicting patent. ‎Therefore, the disclaimed patent may be held unenforceable if the conflicting patent is invalidated for anticipation or obviousness, whereas the conflicting patent would not necessarily be affected by an invalidity finding of the newly issued patent.

This proposal does not affect patent applications with two or more independent and distinct inventions identified in the application, where a divisional application resulting from a restriction requirement under 35 U.S.C. § 121, also known as the safe harbour provision, is filed. Such applications have statutory protection from double patenting rejections for a divisional application.

Effect of the proposed changes and patent prosecution considerations

The proposed changes would constitute a significant departure from current terminal disclaimer practice. Notably, where multiple patents are linked by terminal disclaimers, a competitor need only invalidate based on prior art a single claim in any one of the patents referenced in the terminal disclaimer being filed to render all patents linked by the terminal disclaimer effectively unenforceable. Thus, to resolve a dispute where there are multiple patents tied by terminal disclaimers, competitors would no longer be required to invalidate each patent tied by terminal disclaimers and may instead focus on the first issued patent.

Given that a patent’s enforceability would depend on the strength of another patent linked by a terminal disclaimer, a patent applicant filing a terminal disclaimer under the new requirements may wish to exercise greater caution in filing multiple continuation applications for their patents. 

Alternatively, a patent applicant may want to structure claims to file divisional applications under the safe harbour provisions. It is noted that this practice would be similar to existing best practices under Canadian patent law as there is no equivalent to a terminal disclaimer in Canada. In addition, Canada has an analogous regime where forced divisional applications may be used to resolve double patenting objections (more information in our previous article here).

It is also noted that this proposed rule change is not yet finalized and still open to public comments until July 9, 2024. Accordingly, further revisions may be possible. We encourage all stakeholders to stay informed and watch for upcoming updates as this proposal may have significant implications for all future patent applicants looking to operate in the U.S. market.